On Aug. 15, 2018, the Sixth Circuit in Gaffers v. Kelly Services, Inc. held that the Fair Labor Standards Act (FLSA) does not render an arbitration agreement that requires claims to be brought individually illegal and unenforceable. Following the Supreme Court’s recent decision in Epic Systems Corp. v. Lewis, which held that a federal statute does not displace the Arbitration Act unless it includes a “clear and manifest” congressional intent to make individual arbitration agreements unenforceable, the court rejected the plaintiff’s arguments that FLSA displaced the Federal Arbitration Act simply by providing for a right to “collective action.” Instead, the Sixth Circuit, consistent with Epic, held that the FLSA “gives employees the option to bring their claims together. It does not require employees to vindicate their rights in a collective action, and it does not say that agreements requiring on-on-one arbitration become a nullity if an employee decides that he wants to sue collectively after signing one.” The Sixth Circuit then went on to reject the plaintiff’s next argument that the Arbitration Act’s savings clause permitted the court to refuse to enforce the individual arbitration agreements because they are “illegal” under the FLSA based on Epic.
Continue Reading Sixth Circuit upholds agreement to arbitrate FLSA claims on individual basis
Sixth Circuit finds insurance coverage for phishing losses
The risk of loss due to some form of cyberattack should prompt employers to consider insuring against those losses. But, not all cyberinsurance policies are created equal. That point is made abundantly clear in the recent 6th Circuit case, American Tooling Center, Inc. v. Travelers Casualty and Surety Co. of America.
The plaintiff, American Tooling Center, Inc. (ATC) is a Michigan-based manufacturer that subcontracts some of its manufacturing work to a Chinese vendor. During a time period that it had business insurance coverage through Travelers, ATC received a series of emails from an impostor pretending to be its Chinese vendor. These emails advised ATC that the vendor had changed its bank accounts and that ATC should wire transfer its payments to these new accounts. After ATC had transferred approximately $834,000 to these fraudulent accounts, it learned that it had been duped. ATC then made a claim on its Travelers business insurance policy. Travelers denied the claim and litigation followed.
Continue Reading Sixth Circuit finds insurance coverage for phishing losses
Sixth Circuit upholds termination of human resources employee for employment application misrepresentations and performance deficiencies
Agreeing with the district court’s assessment that “résumé misrepresentations by a senior human resources professional represent an infraction so egregious as to defy correction by mere counseling or other lesser discipline,” the 6th Circuit on April 23, 2018, rejected an appeal from a summary judgment order on claims of pregnancy, race, and age discrimination and retaliation in Bailey v. Oakwood Healthcare, Inc..
Michelle Bailey, a 40 year old African-American woman, was fired from her position as a senior staffing professional at Oakwood Healthcare, Inc. (Oakwood) on the day she returned from a three-month maternity leave. During her maternity leave, her supervisor had identified deficiencies in her work performance that prompted the supervisor to go back and review her qualifications. When she checked, she found what Ms. Bailey acknowledged in deposition were “embellishments” on her employment application. In notifying Ms. Bailey of her termination, Oakwood relied on both the deficiencies and the misrepresentations. Ms. Bailey later sued, claiming that she was fired because of her pregnancy, her race and her age as well as in retaliation for concerns she had expressed about the rejection of employment applications of certain African-American candidates for employment at Oakwood prior to her maternity leave. The district court granted summary judgment in Oakwood’s favor on each of these counts.
Continue Reading Sixth Circuit upholds termination of human resources employee for employment application misrepresentations and performance deficiencies
Wage and Hour Division announces pilot limited “amnesty” program
The U.S. Department of Labor’s Wage and Hour Division (WHD) has announced a new nationwide pilot program, called the Payroll Audit Independent Determination (PAID) program, which is designed to facilitate resolution of potential overtime and minimum wage violations under the Fair Labor Standards Act (FLSA). According to the WHD’s website describing the program, the program’s primary objectives are to resolve wage and hour claims expeditiously and without litigation, to improve employers’ compliance with overtime and minimum wage obligations and to ensure that more employees promptly receive any owed back wages.
WHD states that it will implement this pilot program nationwide for approximately six months. At the end of the pilot period, WHD will evaluate the effectiveness of the pilot program, as well as potential modifications to the program to determine its next steps.
Continue Reading Wage and Hour Division announces pilot limited “amnesty” program
NLRB establishes new standard for evaluating employee handbook policies
The new Republican-led National Labor Relations Board (NLRB) has wasted little time in reconsidering decisions made during the Obama Administration. In its Boeing, Inc., decision, announced on Thursday, Dec. 14, 2017, the board overturned its Lutheran Heritage Village-Livonia decision that has guided its evaluation of employee handbook policies for the past 13 years and most recently has come under intense criticism from the employer community for chipping away at common employee handbook policies.
Continue Reading NLRB establishes new standard for evaluating employee handbook policies
How employers can help employees after a natural disaster
In recent months we have seen a significant number of natural disasters – from Hurricanes Irma to Harvey to Maria and the massive wild fires crossing Northern California. Our colleague, Abby Brothers, shares the tax-free options employers can use to support their employees and communities. Check out her full post on Employee Benefits Law
Texas district court strikes down Obama DOL’s proposed overtime rule
Many thanks to Arslan Sheikh for his assistance in preparing this post.
Last week, a federal judge in Texas struck down a proposed Obama-era rule that would have expanded the number of workers who qualify for overtime pay under the Fair Labor Standards Act (FLSA).
The proposed rule
In 2016, the Obama administration’s Department of Labor (DOL) planned to implement a new rule that would have more than doubled the minimum salary threshold for “exempt” status under the FLSA from $23,660 to $47,476 per year. Under the DOL’s proposed rule, an employee who made an annual salary below $47,476 would have been entitled to overtime pay for all hours worked beyond 40 a week. We last reported on the proposed salary increase in November of 2016, when federal court Judge Amos Mazzant of the Eastern District of Texas issued a nationwide preliminary injunction against the DOL’s rule. Our blog post outlines the Texas court’s holding and rationale.
What happened this week?
On Aug. 31, Judge Mazzant issued another decision, striking down the Obama administration’s proposed salary threshold rule. As a result, the minimum salary for exempt status under the FLSA will remain, for the time being at least, at $23,600.
Judge Mazzant held that the DOL exceeded its authority by issuing the proposed rule because the department focused too heavily on employees’ salary-levels, rather than their job duties, to determine if they were exempt from overtime under the FLSA. Judge Mazzant struck down the rule, holding that because the DOL’s proposed rule would have doubled the annual salary threshold from $23,660 to $47,476, it would have made salary-level the predominant factor in determining who is exempt from overtime under the FLSA. It should be noted, however, that Judge Mazzant did not rule on the general lawfulness of a salary-level test; he only evaluated the salary-level test the DOL proposed in this instance.
Continue Reading Texas district court strikes down Obama DOL’s proposed overtime rule
Full Eighth Circuit upholds employee terminations in Jimmy John’s paid sick leave dispute
In an en banc decision, the 8th U.S. Circuit Court of Appeals has overturned an earlier panel decision, which we reported on here, in MikLin Enterprises Inc. v. NLRB, in which the panel had upheld the NLRB’s finding that a Jimmy John’s franchisee had violated the rights of its employees under the National Labor Relations Act, when it fired them for hanging posters at their shops that suggested that the customers could be eating sandwiches that were made by sick employees in an effort to pressure the franchisee to adopt a paid sick leave policy.
In the en banc decision, the full 8th Circuit refused to enforce the NLRB’s unfair labor practice finding and held that an employer may fire an employee for “making a sharp, public, disparaging attack upon the quality of the company’s product and its business policies, in a manner reasonably calculated to harm the company’s reputation and reduce its income.” The court emphasized that “allegations that a food industry employer is selling unhealthy food are likely to have a devastating impact on its business” and that the fired MikLin employees made a conscious decision maximize this effect by choosing to launch their attack during flu season. The court added:
“By targeting the food product itself, employees disparaged MikLin in a manner likely to outlive, and also unnecessary to aid, the labor dispute. Even if MikLin granted paid sick leave, the image of contaminated sandwiches made by employees who chose to work while sick was not one that would easily dissipate.”
Don’t wannacry? Help your IT staff prevent ransomware
I have frequently blogged about human resources departments’ role in preventing data breaches in their organizations and to date have largely focused on training employees to recognize and respond phishing exploits designed to encourage employees to click on email links or attachments that contain malware. See for example here, here and here. But,
NLRB panel majority upholds employer right to justify “no recording” policy; denies general counsel summary judgment motion
In a follow up to its Whole Foods Market, Inc. decision, which found unlawful an employer policy prohibiting workplace recordings by employees without prior management approval, an NLRB panel majority in Mercedes Benz U.S. International, Inc. denied the General Counsel’s motion for summary judgment on a similar “no recording” policy. According to the majority, Mercedes was entitled to a hearing, which would provide an opportunity to present evidence regarding its business justifications for the policy, and about whether the policy was communicated or applied in a manner that clearly conveyed an intent to permit protected activity.
Member Pearce dissented, arguing that the employer’s policy which prohibited the use of cameras and video recording devices in the plant without prior authorization, was facially overbroad and did not provide any exceptions for protected concerted activity. As such, according to Member Pearce, the policy tends to impermissibly chill employee expression and therefore was unlawful regardless of the employer’s intent in adopting and implementing the policy and regardless of whether employees actually interpreted the policy as restricting their Section 7 rights.